China hikes interest rates by 25 bps

The People's Bank of China (PBOC) said today that it will raise the one-year yuan lending rate to 6.56% from 6.31%. The one-year yuan deposit rate will be hiked to 3.50% from 3.25%.

China's central bank said on Wednesday that it would increase the benchmark deposit and lending rates by a quarter percentage point as part of the government's efforts to rein in spiraling inflation.


The People's Bank of China (PBOC) said today that it will raise the one-year yuan lending rate to 6.56% from 6.31%. The one-year yuan deposit rate will be hiked to 3.50% from 3.25%.


This is the third rate increase by PBOC this year and its fifth rate increase in the latest round of monetary tightening.

The Chinese central bank has also hiked banks' reserve requirement ratio (RRR) six times in 2010 and six times so far this year.


Inflation is the Chinese authorities’ top policy priority for the near future.

Abundant liquidity and elevated commodity prices drove China's inflation to a 34-month high of 5.5% in May.

Chinese Prime Minister Wen Jiabao said last month that the government may fail to meet a full-year inflation target of 4%. The rate was 5.2% for the first five months.